Don here...
Gianni Di Poce just flagged something that stopped me in my tracks. Fund managers dumped stocks last week at one of the fastest rates in history.
Yet Bitcoin and Ethereum have held firm through the entire selloff.
That disconnect matters. Gianni's read is straightforward: if crypto were getting hammered alongside equities, we'd be in a genuine risk off environment. Crypto rallying during turbulent conditions signals the selloff may not be as severe as the headlines suggest.
Stocks are bid again today after Monday's strong session. The Nasdaq is leading, the Russell 2000 is up the most, and semiconductors continue outperforming the broader market. That last point is a risk on signal Gianni has been tracking closely.
But there is a problem lurking beneath the surface. Crude oil is calling the shots.
Gianni showed that the VIX is trading nearly in lockstep with oil prices. Rising oil is fuel for bears, and with the Iran conflict escalating, that pressure is not going away soon.
The Fed meets tomorrow. No rate cut is coming. Gianni is focused on the rhetoric, specifically whether Powell will acknowledge the stress building in private credit markets.
That stress matters because of the historical parallel. The 2023 regional banking crisis hit right around this same time of year. The Fed stepped in with backdoor interventions, and that turned out to be a fantastic time to buy stocks. Gianni raised the possibility that this private credit crunch could set up the same way.
Here is what Gianni covered in tonight's video:
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Financials are seeing massive outflows as the second largest sector in the market behind technology. That rotation is creating serious headwinds for the indices.
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The S&P 500 has closed near the lows of its daily range for four consecutive sessions. Gianni flagged that as unhealthy price action heading into a Fed decision.
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Circle Internet Group, a major stablecoin issuer, just hit Gianni's upside target at $128. He locked in a 33% gain on the first half of the position through Trinity Trades.
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The day after Fed day matters more than Fed day itself. Gianni expects the dollar to pull back post-meeting, which could provide a tailwind for precious metals and risk assets.
Gianni also laid out his long term thesis: the Nasdaq could rally as high as 100,000 over the next few years as the second wave of AI plays out. The noise right now is masking an abundance of opportunities at the individual stock level.
Click here to watch Gianni break down the Fed setup, the crypto signal, and the trades he is making right now
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
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